Trump’s 20% Hormuz cargo charge: What it means for India’s oil bill and trade
Trump said on Monday that the US would reinstate a naval blockade of Iranian ports and impose a 20 percent levy on cargo passing through the strait, framing it as compensation for American forces securing the route.
President Donald Trump speaks after signing executive orders modifying the Bears Ears National Monument and the Grand Staircase-Escalante National Monument in the Oval Office of the White House. (Photo: AP)
US President Donald Trump’s announcement of a 20 percent charge on all cargo transiting the Strait of Hormuz has raised fresh concerns for India, which sources a significant share of its crude oil and gas imports through the waterway, as the conflict between the US, Israel and Iran continues to spread across the Gulf.
Trump said on Monday that the US would reinstate a naval blockade of Iranian ports and impose a 20 percent levy on cargo passing through the strait, framing it as compensation for American forces securing the route. He said the charge would apply to “all other countries” except vessels linked to Iran, which would be barred entirely, with the blockade taking effect from 8pm GMT on Tuesday. Speaking to reporters at the White House, Trump said the US was “hitting them very hard” and “controlling the strait,” while adding that a peace deal with Iran remained possible.
How did the tanker attack fit into this?
Hours before Trump’s announcement, the UAE said Iranian cruise missiles had struck two of its tankers, the Mombasa and Al Bahiyah, in the strait’s southern shipping lane within Omani territorial waters, killing one Indian crew member and injuring eight others, six of them Indian nationals and two Ukrainian, four seriously.
تعلن وزارة الدفاع عن تعرض الناقلتين الوطنيتين (ممباسا) و (الباهية) للاستهداف بصاروخين جوالين إيرانيين في الممر الجنوبي لمضيق هرمز بالمياه الإقليمية العمانية.
وقد أسفر الاستهداف عن مقتل أحد أفراد طاقم الناقلة (ممباسا) من الجنسية الهندية، وإصابة 8 من بينهم 4 إصابات بليغة. (6 من… pic.twitter.com/KVz3qDu6kf
The UAE’s Ministry of Defence called it a “brazen attack” that violated international law and said the country reserves its right to respond.
How has Iran responded?
Iran’s foreign minister, Abbas Araghchi, responded to Trump’s blockade announcement by writing on X that Tehran would remain the strait’s “guardian,” sarcastically agreeing that whoever secures the waterway should be compensated, while calling 20 percent “too much.”
POTUS is absolutely right. Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated for this service.
Iran has always been the GUARDIAN of the Strait and will remain so FOREVER.
Iran’s top military command separately said it would not allow the US to “interfere in the management” of the strait, warning that any US-linked cooperation would be treated as an act of war against Iranian sovereignty.
The International Maritime Organization, the UN’s shipping regulator, said there is no legal basis for imposing mandatory tolls on transit through an international strait, a spokesperson told Reuters.
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At the International Maritime Organization’s meeting, protection of vital shipping lanes was discussed. Gulf countries, the United States and Iran clashed over the future of the strait, according to a Reuters report. (Reuters file photo)
Why does this matter for India?
India has a lot riding on what happens in the Strait of Hormuz. A large share of its energy needs flows through this single chokepoint close to 40% of India’s crude oil imports, 60% of its LNG imports, and around 90% of its LPG imports come from West Asia through the strait.
However, the country relies on imports for over 88% of its oil, 60% of its LPG, and roughly half of its natural gas needs. That level of dependence means any disruption to shipping through the strait doesn’t just create a logistics headache it directly threatens India’s energy security and pushes up costs across the economy, since there’s no easy substitute for that volume of supply on short notice.
The financial impact scales quickly too: India imports 1.8-2 billion barrels of crude oil a year, so every $1 increase in the price per barrel adds up to $2 billion to the country’s annual oil import bill. Given how exposed India is on this front, a Nomura report from March flagged India as one of the three Asian economies most vulnerable to elevated oil prices in terms of import costs and current account impact, alongside Thailand and South Korea, noting that a 10% jump in oil prices tends to widen India’s current account deficit by 0.4% of GDP.
There has been no immediate statement from India’s Ministry of External Affairs on either the tanker attack or the proposed cargo levy. The ministry has issued advisories to Indian crews during earlier flare-ups in the strait and is likely to face questions on both fronts.
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President Donald Trump speaks after signing executive orders modifying the Bears Ears National Monument and the Grand Staircase-Escalante National Monument in the Oval Office of the White House. (Photo: AP) 
